Insurance trends in India The number of people getting insured is constantly increasing all over the world. But the growth of the insurance sector in India is slowing down. The share of the insurance sector in GDP has come down from 4.2% to 3.7% in the last two years. Let us understand why people are avoiding getting insurance despite India’s fast economic growth.
The pace of the insurance sector in India is slowing down. The report of insurance regulator IRDAI shows that the share of the insurance sector in GDP has come down from 4.2 percent to 3.7 percent in the last two years. This figure is also surprising because the trend of insurance is increasing all over the world. The share of the insurance sector in global GDP has increased from 6.8 percent to 7 percent.
Why did the share of the insurance sector in GDP decrease?
There has been a decline in the sale of life insurance policies in India. Its effect can be seen on the overall sector. The reach of its segment has come down from 3.7 percent to 2.8 percent. During the Corona epidemic, the life insurance sector was growing the fastest in the financial year 2021-22. At that time people were scared due to the epidemic, so more people were getting insurance. Then the share of the insurance sector in GDP reached a high of 4.2 percent. But, since then it has been declining continuously.
However, there has been a marginal increase in the per capita premium in the country. It will be $95 in 2023-24, up from $92 in FY23. The global average is $889. This means we are still lagging far behind.
Some highlights of IRDAI report
- The claim ratio in the health insurance sector has declined.
- It fell from 88.89% in 2022-23 to 88.15% in 2023-24.
- Insurance companies settled a total of 2.69 crore health insurance claims.
- They spent a total of Rs 83.493 crore on settling claims.
- The average per claim payout in the insurance sector was Rs 31,086.
Why are people spending less on insurance?
Experts believe that high GST on insurance is a big reason why people are not getting insurance in large numbers. The government levies up to 18% GST on different insurance policies. Recently, a meeting of the GST Council was held under the leadership of Finance Minister Nirmala Sitharaman. In this, there was a discussion about reducing GST on insurance policies, but it could not be finalized.
Earlier, insurance was also considered a good means of investment. But now people are investing a lot in the stock market and mutual funds, where there is a possibility of getting higher returns. At the same time, the insurance premium has also increased by 25-30 percent in the last few years. Due to this, the middle class is finding it expensive. Therefore, many people are avoiding getting insurance.
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